The American Stars and Stripes are hoisted in Whitehall with a statue of Lord Nelson on top of his column in Trafalgar Square, London, England, June 3, 2019.
Richard Baker | In Pictures | Getty Images
LONDON — President-elect Donald Trump’s proposed trade tariffs could be a boon for Britain, with analysts saying they could lead to exemptions, an economic recovery and a possible resumption of talks on a trade deal.
Britain may want it “Special relationship” Trade disputes across the Atlantic and Trump’s enthusiasm for Brexit are enough to shield him from the most punitive proposed trade taxes. But analysts believe the incoming president’s main motivation may be purely economic.
“The good thing about the UK is that it’s not at the center of the trade war. It just doesn’t have the same need to level the playing field and balance trade imbalances,” UBS chief U.S. economist Jonathan Pingle told CNBC on Tuesday. “
Trump has long argued that global trade imbalances are detrimental to the U.S. economy, especially as domestic production is undermined by foreign goods. So in the 2024 campaign, he vowed to impose 10% to 20% tariffs on all foreign imports— He said the tax rate on Chinese goods will rise to 60% to 100%.
The United States is the UK’s largest trading partner, and there are trade relations between the two countries. total In the four quarters to the end of the second quarter of 2024, tariffs will reach 304.3 billion pounds ($388 billion).
However, analysts say that unlike China and the European Union, where the United States runs huge trade deficits, Britain’s trade balance is much tighter and concentrated mainly in services, which is unlikely to provoke tough measures from the protectionist Trump administration.
I suspect the UK would have reason to agree to some kind of concession (or) exception… which might mean any tariffs would be watered down.
Paul Dales
Chief UK Economist, Capital Economics
“It is also unlikely that Trump believes that the UK is exploiting the United States in the same way that he believes that China and the EU are taking advantage of the United States,” Andrew Wishart, senior UK economist at Berenberg, said in emailed comments on Monday.
In fact, Paul Dales, chief UK economist at Capital Economics, said the UK might actually see tax cuts reduced or even be exempted from the effects of the schemes.
“I suspect that if the US imposes tariffs on UK imports, the UK would be justified in agreeing to some sort of concession (or) exclusion,” Dales told CNBC via email on Monday. “This could mean that any tariffs would be weakened over time. or cancel.”
While economists have warned that Trump’s proposed tariffs would lead to widespread inflation in the global economy, Capital Economics predicted in a report before the election that the impact of the tariffs on the British economy would be either small or potentially positive. Because of currency fluctuations and potential allowances.
US-UK free trade agreement reached
The potential for special UK subsidies has renewed concerns about a possible bilateral trade deal between the two countries.
The UK-US Free Trade Agreement has been touted as one of the main benefits of Brexit, with Brexit campaigners saying such a deal could be struck within a short period of time after Brexit. But progress has been slow since then.
When interviewed by CNBC, the Trump campaign did not comment directly on the possibility of special trade subsidies for the UK, nor the broader trade agreement. However, a transition spokeswoman said Trump’s election victory gave him “a mandate to deliver on the promises he made on the campaign trail.”
On January 31, 2020, in Parliament Square opposite the Houses of Parliament in London, a man wearing an oversized “Make America Great” hat and an American flag held up a British flag.
Greenkirk | AFP | Getty Images
At the same time, the British government said it “looks forward to working closely with President Trump to improve UK-US trade relations to support businesses on both sides of the Atlantic.”
Reports emerged over the weekend that Trump might be willing to strike a deal with Britain, in part because of the president-elect’s support for Brexit.
former political appointee peggy grande Tell The Independent said on Sunday that trade tariffs may hit the EU harder than the UK because Trump wants to see a “successful Brexit”. Meanwhile, New Jersey Democratic Governor Phil Murphy Tell The Daily Telegraph said Trump may treat Britain more favorably because he “sympathizes with people leaving the bureaucracy.”
I don’t think Trump cares about Britain exercising its freedom to leave the EU…it’s an attempt to divide and conquer Europe.
Mujtaba Rahman
Managing Director of Eurasia Group
Others, however, are less optimistic about Trump’s support for British sovereignty, arguing that the former president’s main motivation may be to maintain control of the continent.
“I don’t think Trump cares about Britain exercising its freedom to leave the EU, but I do think it’s about dividing and conquering Europe,” Mujtaba Rahman, managing director of Europe at Eurasia Group, told CNBC by phone. attempt.
Starmer’s dilemma
Still, trade negotiators may still have a long way to go in reaching a comprehensive bilateral trade agreement, and analysts have expressed doubts about whether there is enough political will on both sides to push for a deal.
“If Trump is really keen on this, I doubt it will happen during his 2017 to 2020 term as president,” Capital Economics’ Dales said.
While the pro-Brexit Conservative government was keen to demonstrate the benefits of leaving the EU during Trump’s first term, finding common ground on key sticking points of the deal may be more elusive now that Labor is at the helm.
For example, British Prime Minister Keir Starmer is unlikely to lower food standards and accept imports of hormone-injected beef and chlorinated chicken required under US trading conditions.
“Both sides have major vested interests and their preferences do not overlap. If there is a challenge for the Starmer government, it is how it manages these discussions,” Rahman said.
At the same time, Starmer will seek a balance to avoid causing frustration and potential retaliation from key allies in Brussels, as he is seeking reset relationship Across the continent.
“If the UK gets an exemption for exports to the US, that would make it advantageous for the EU. Therefore, any retaliatory measures taken by the EU could also target trade with the UK,” Wishart said.
‘This is more damaging than freer trade with the United States’
